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From the editorial advisory board: The fiscal cliff

Posted:
11/17/2012 01:00:00 AM MST

President Obama made his case for tax breaks for the middle class first, then proceeding on raising taxes for the wealthy and entitlement reform to avoid the "fiscal cliff." In Colorado, community leaders and academics discussed Colorado's own budget problems. What do you think?

It's a curb, not a cliff. Panic will not ensue; except, perhaps, among the commentariat, but their hair's on fire most of the time anyway, while the rest of us, appropriately, go on about our lives. Even so, lame duck sessions rock. Let's compare mandates: Republicans claim "success" in safe congressional districts crafted in states they control. The President, having won the electoral and popular vote, points out that his determination to eliminate tax breaks for millionaires and billionaires could not have been more clear; adding that this policy receives broad support even among those who voted for Gov. Romney.

If the Republicans choose to die on this hill, they just might. Lame-duck Republicans will do their colleagues a favor by accepting this minor adjustment -- remember, millionaires receive the same tax breaks the rest of us do on the first $250,000 they earn (something's better than nothing) -- and by passing the Dream Act. The filibuster rule in the Senate ought to be changed, too (if we must have filibusters, supporters should be required to stand before the Senate and continue to hold the floor until they pass out -- it's too easy now).

Meaningful and effective campaign finance reform should also be passed. The Supreme Court's Citizen Union decision unleashed the plutocracy's Kraken. Corporations aren't people. Money isn't speech. At the very least, full disclosure and transparency must be required. Make 'em put their mouth (and name) where their money is.

Republican House members will need to change their positions. The prospects for getting their preferred deal from the White House and the Senate were stronger two years ago than they are today. Voters have sent a clear signal that enough is enough. The do-nothing puppets of Grover Norquist, lacking in basic math and governing skills, will need to step out of the way and follow Obama's lead on avoiding the fiscal cliff. Boehner's No. 1 job before year-end should be to determine which Republican seats can best weather a compromise, and deliver their votes to the people.

If this doesn't happen, Americans should (to borrow a Vietnam war era phrase) vote them back into the Stone Age in 2014.

Once Congress has taken care of assuring additional trillions in revenue over the next decade by reversing tax cuts and loopholes for the wealthy, it can move on to other important debt-affecting issues. High priorities include cutting defense spending and bolstering Obamacare with effective health care cost controls

Though I won't hold my breath, I would love to see the end of tax exemption for religious organizations (excluding those that do charitable work). A University of Tampa professor recently published conservative estimates that we subsidize churches at over $71 billion annually. From the perspective of a growing number of Americans, many of these institutions do more harm than good. Subsidizing them is questionable under the establishment clause of the U.S. Constitution.

When Obama blinked two years ago and agreed to extend the Bush-era tax cuts for all, he publicly stated that our economy was too fragile to risk a rate hike on anyone. Ironically, our economy has yet to rebound and GDP is lower today. So what's different this time? President Obama, please explain your logic.

Regardless, Obama's stick-it-only-to-the-rich tax plan won't get the job done. Raising rates on the top 2 percent will generate only $82 billion more a year -- not nearly enough to offset the annual $1 trillion-plus federal deficits we've been running since 2009. And it won't put a dent in our $16 trillion national debt. Although our economy could be negatively affected short term, we need to roll back all the Bush tax cuts. That measure, combined with taking a switchblade to wasteful spending and entitlement programs, would give us a shot at restoring fiscal sanity.

A well-known, respected Boulder business owner recently commented, "If the current administration would first enact laws to curb out-of-control entitlements and reckless government spending, I'd willingly pay more taxes. But make the cuts first--and then send me the bill!" Historically, the congressional Grand Bargain has been higher tax rates in exchange for reduced spending. Rates always get raised, but spending reductions rarely materialize. That's human nature at work.

In Colorado, increasing the income tax rate from 4.63 to 5 percent (on everyone!) is probably a foregone conclusion. Meaningful spending reductions? Doubtful.

Budget arguments never focus on the $585 billion costs of the war in Afghanistan. Financial loopholes and other exemptions need to be overhauled. Congress has had three years to avoid the trauma surrounding the Bush tax cut deadline of Dec. 31, 2013. Since Congress has put this decision off to the last minute, its members should not go home for the holidays until they pass a long-term remedy that addresses what Obama and his party were elected to do.

The election is over .The majority of the popular vote has endorsed President Obama's pledges to protect middle class families and to levy a larger tax on the wealthiest Americans. Spending cuts should include getting out of Afghanistan in 2013 (not two years later) and eliminating $80 billion subsidies for non-tax paying elephants like Wells Fargo, Verizon, GE, IBM, Exxon-Mobil, and others.

What about this "fiscal cliff" scare term that was invented nine months ago? Some argue it would be good for the economy to let the tax plan (that was voted by both parties) slide into 2013. I believe Congress should have the courage to eliminate the elephant loopholes that enable establishment of shell companies in offshore havens for tax avoidance. These loopholes are used by 83 of the nation's top 100 publicly traded companies .The lost tax revenue equals $100 billion or $434 in extra costs to the average taxpayer. No more kicking the can. Will Colorado do any better?

Under current sluggish growth conditions, the ability of Colorado to fund state services remains impaired. Overall, the budget figures for 2013-14 reflect an expected modest improvement but in historical terms these still remain a very large gap.

Governor Hickenlooper has proposed a $20.3 billion budget in 2013-14. This budget is short $148 million. The question remains as to how Colorado hopes to overcome the shortfall. While Colorado's new budget would result in a 5.4 percent increase over last year's budget, the new figures represent $1.1-billion, or 14.4 percent, less than the 2007-8 budget.

According to the Governor, the increases are meant to provide state employees with a raise, more money for K-12 education, schools and colleges. But in the new budget the largest increase (8.6 percent) will benefit health care. However, that is a tricky number because 40 percent of money will come from federal funds.

We know that Washington is facing a deficit that exceeds $1-trillion and is likely to tighten its purse.

While Colorado's revenue outlook seems to be trending upward, it will have to implement spending cuts and other measures to meet the new budget. Despite the announced raises, impending shortfalls are likely to fall on education, health care and human services. They represent 40 percent of the state's budget.

Overall, economists predict that Colorado in 2013-14 will do better than the nation as a whole when it comes to creating new jobs, reducing unemployment and attracting newcomers.

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